Increase in production

The Tasmanian dairy industry produced 883 million litres of milk from 434 dairy farms in 2015/16.

Over the past 10 years milk production in the Tasmanian Dairy Industry has continued to grow at an average rate of close to 5%pa. There has been a 43% increase in production compared to a national decrease of 4%. Tasmania is the only State of Australia to show growth. This is based around sustainable farm management practices, efficient on farm production systems and a relatively favourable climate for pasture based dairy farming..

The Tasmanian dairy industry produced a record 891 million litres of milk off approximately 440 dairy farms in 2015/16. Tasmania now produces over 9% of the nation’s milk.

 Tasmania Dairy Delivers

Development Potential

The Tasmanian industry has the potential to development further with a more effective cost of production, favourable climate and in continued access to water for irrigation, land for new dairy development and recent expansions in milk processing capacity . There is scope for investment in current dairy farms, for new dairy farm conversions and for additional processing capacity.

Recent investments by Murray Goulburn and Lion Dairy and Drinks have been significant for the industry and a number of smaller operators have also invested. Each year, Dairy Australia surveys a proportion of Tasmania's dairy farmers as part of Situation and Outlook. This factsheet outlines the some of the results of the 2016 survey. For information on the latest report check the Dairy Australia website at:

  dairyaustralia.com.au/Markets-and-statistics

The regions status

  • There are 440 dairy farms in Tasmania.
  • Total milk production for the region in 2015/16 was 883 million litres (down one per cent on last year). This is 9.25 per cent of national milk production.
  • The estimated value of farm milk production in 2014/15 from the region was around $370 million.
  • Rainfall in 2016 was above average for Tasmania with some regions experiencing floods.
  • Milk prices are driven by the annual prices offered by Murray Goulburn and Fonterra which collects the majority of milk in the state. This drives prices offered by a number of other regional processors of cheese, processed dairy products and fresh dairy products.
  • Milk price reductions by major processors late in the season impacted farmer confidence.
  • Major companies operating in the region include Fonterra Australia, Murray Goulburn, Mondelez/Cadbury and Lion Dairy and Drinks. Milk is mainly used in cheese and powder production for export, as well as fresh dairy products.
  • The industry directly employs 1,500 people in the farm sector and 1,200 people in the processing sector.
  • Tasmania has a ryegrass dominant, pasture-based dairy industry with feeding systems ranging from very low input to high input systems. Peak pasture growth occurs in spring – for many farms this accounts for two-thirds of pasture growth for the season. Rainfall in Tasmania tends to be winter dominant.
  • Tasmania retains a seasonally based calving pattern with the majority of cows calved in spring but there are increasing numbers of farms that also calve some cows in autumn. Many Tasmanian dairy farms now use cross-breeding in their herds.

Tasmanian key points from the 2015 survey

  • Tasmanian dairy farmers are still the mostly likely in the country to be positive about the future. However there is some evidence that concerns over farm gate milk prices are becoming more widespread.
  • Although almost all the Tasmanian respondents realised an operating profit last financial year, the proportion expecting to do so this year is somewhat lower.
  • Loyalty to the milk company supplied is strong in Tasmania, with only a small proportion changing or intending to change the company they supply.
  • Respondents’ milker numbers remained steady over the past year, but per cow production increased overall. These increases are expected to continue over the next 3 years.
  • Tasmanian dairy farmers have been the most likely to speak positively about the long term viability of the industry recently and they typically encourage people to remain in the industry.

Tasmanian Dairy Farm Monitor Report for 2015/16

  • This is the third year of the Dairy Farm Monitor Project in Tasmania with 29 dairy farms surveyed by Dairy Australia.
  • In 2015/16, dairy farm profitability declined predominantly due to a lower milk price and higher costs with the dry season. The average milk price received in 2015/16 was $5.55/kg MS, a 11% decrease from $6.19/kg MS in 2014/15.
  • There was only a small change in the overall cost of production. The average increased by 1% from $5.02/kg MS to $5.24/kg MS due in part to higher feed costs.
  • In 2015−16 the data obtained from 29 farms in Tasmania revealed average whole farm earnings before interest and tax (EBIT) of $246,639, a 48% decrease compared with the previous year. The average gross income was lower by 12% while the cost of production was 4% higher in 2015−16 compared with 2014−15. Milk sales increased slightly from 924 kg MS/ha in 2014−15 to 936 kg MS/ha in 2015−16. Return on assets was 3.9% compared with last year’s 7.8%.
  • Of the 29 participants, 26 recorded positive return on assets and return on equity, compared to the previous year.
  • Tasmania continues to out perform other regions in Australia with a higher ROA
  Tasmanian Dairy Farm Monitor Report for 2015/16